Bankruptcy

[cockatiel]

My friend's daughter and son-in-law have been reckless with their spending and have now declared themselves bankrupt. They have lost the home they were buying and have had to move into rented accommodation. They had to pay money to the courts for the bankruptcy and needed �1,000 plus a deposit on the rented property. They couldn't afford to pay the required amount. My friend is saving for her retirement and didn't feel she could afford to help out, but eventually loaned the �1,000 on the understanding that it would be paid back to her after 3 months. Her son-in-law's family paid the deposit on the rented property understanding that the money would be refunded. They have received their refund, but somehow my friend has been added to the list of creditors and told she is unlikely to see her money again. She is furious and upset about this. Is there anything she can do to get repaid?

[Mamjet]

She could maybe ask her daughter what the **** is going on?

[Sammy Snake]

If they had paid your friend back within the three months, this would have been seen as giving preferential treatment to a creditor. It doesn't matter that it was a family member, all creditors should be treated the same when someone declares bankruptcy.

Unfortunately I doubt she will see any of the money any time soon. I doubt that the Official Receiver knows that the other set of parents have been repaid either.

[themas]

All debts - including those to family & friends - are included in the bankruptcy, & the bankrupt commits an offence if he/she makes any payment direct to the creditor while bankrupt.

So the last post is correct. If the OR finds out about the payment to the son-in-law's family he will very likely want to undo that transaction & take the money for the creditors. He will also enquire how the bankrupt was able to afford to pay it.

Once the bankrupt is discharged there is no legal bar on them paying off the debts so I think the most your friend can hope for is that the couple act honourably when that time comes. Meanwhile, she has a perfect right to be extremely angry & upset with them!

[cockatiel]

Thanks folks for your replies